Jaypaul Ocampo Acidera, CPA 2016

CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

INDIVIDUAL TAXPAYER Bela Cruz / De Vera I Lopez / Llamado

A 1. A, a French citizen permanently residing in the Philippines, received several items during the taxable
year Which among the following is NOT subject to Philippine income taxation'?
a. Consultancy fees received for designing a computer program and installing the same in the
Shanghai facility of a Chinese firm.
b. Interest from his deposits in a local bank of foreign currency earned abroad converted to
Philippine pesos.
C . Dividends received from an American corporation which derived 60% of its annual gross receipts
from the Philippine sources for the past 7 years.
d. Gains derived from the sale of his condominium unit located in The Fort, Taguig City to another
resident alien.

B 2. A, a Frenchman, arrived in the Philippines on January 1, 2014 and continued to live and engage in
business in the Philippines. He went on a tour of Southeast Asia from August 1 to November 5,
2014, He returned to the Philippines on November 6, 2014 and stayed until April 15, 2015 when he
retuned to France. He earned during his stay in the Philippines a gross income of P3 million from his
investments in the country. For the year 2014, Pierre's taxable status is that of
a. A non-resident alien not engaged in trade or business in the Philippines.
b. A non-resident alien engaged in trade or business in the Philippines.
c. A resident alien not engaged in trade or business in the Philippines.
d. A resident alien engaged in trade or business in the Philippines.

D 3. A and B were legally separated. They had six minor children, all qualified to be claimed as additional
exemptions for income tax purposes. The court awarded custody of two of the children to A and the
three to B, with A directed to provide full financial support for them as well. The court awarded the 6th
child to A's father with A also providing full financial support, Assuming that only A is -gainfully
employed while B is not, for how many children could A claim additional exemptions when he files
his income tax return?
a. Six children
b. Five children
c. Three children
d. Two children

D 4. Which of the following is not correct? A non-resident citizen means, a citizen of the Philippines
a. Who establish to the satisfaction of the CIR the fact of his physical presence abroad with a
definite intention to reside therein
b. Who 'leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for
employment on a permanent basis
C. • Who works and derives income from abroad and whose employment thereat requires him to be
physically present abroad most of the time during the taxable year
d. Who has been previously considered a non resident citizen and who arrives in the Philippines at
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anytime during the taxable year to reside permanently in the Philippines with respect to his
income derived from sources abroad for the taxable year

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C 5. Which of the following statement is not correct?

a. An individual citizen of the Philippines who is working and deriving income iom abroad as an -
overseas contract worker is taxable on income from sources within the Philippines .
b. A seaman who is a citizen of the Philippines and who receives compensation for !services rendered
abroad as a member of the complement of a vessel engaged exclusively in intemptional trade shalt
be treated as a non-resident citizen 1. •
C. A non-resident citizen who is not engaged in business in the Pliilippines is treated as a non-
resident alien who is not engaged in business in the Philippines
d. An alien individual, whether a resident or not of the Philippine, is taxable only on income
derived from sources within the Philippines. I.

D 6. Which of the following statements is not correct?

a. In the case of married individuals, where only one of the spouses is deriving income, only such •
spouse shall be allowed the personal exemption •

b. In the case of married individuals, the additional exemptions may be claimed by only one of the
spouses
C. As a nile, the husband shall be deemed to be the head of the family and proper claimant of the
additional exemption
d. In the case of legally separated spouses, additional exemption may be claimed by the spouse who
has custody of the children but shall not exceed four (4) for each spouse .

D 7. A citizen of the Philippines who works and derives income from abroad is a resident citizen if hd
stayed outside the Philippines
a. For less than 180 days
b. For more than 180 days
C. For 183 days or more •

d. For less than 183 days

C 8. A citizen of a foreign country is considered a non-resident alien engaged in business in the Philippinesi
if he stayed inside the Philippines -
a. For 183 days or more
b. For less than 183 days
C . For more than 180 days
d. For less than 180 days

D 9. A resident citizen is taxable on all income derived from sources

a. Within the Philippines only
b. Without the Philippines only
C . Partly within and partly without
d. Within and without the Philippines

A 10. A non-resident citizen is taxable on all income derived from sources

a. Within the Philippines
b. Without the Philippines
C. Partly within and partly without
d. Within and without the Philippines

A 11. A resident alien is taxable on all income derived from-sources

a. Within the Philippines
b. Without the Philippines J. O. A.
C. Partly within and partly without
d. Within and without the Philippines
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A 12. A non-resident alien is taxable on all income derived from sources

a. Within the Philippines
b. Without the Philippines
C. Partly within and partly without
d. Within and without the Philippines

D 13. A citizen of the Philippines who works abroad and whose employment requires him to be physically
present abroad most of the time during the taxable year is
a. Taxable on income within and without the Philippines
b. Taxable income from without the Philippines
C. Exempt from the income tax
d. Taxable on income from within the Philippines

C 14. Which of the following statements is not correct?

a. If only one spouse is deriving taxable income, only said spouse may claim the additional
exemption
b. If both spouses earn taxable income only one of the spouses can claim additional exemption
C. If legally separated from the spouse, the husband can claim the additional exemption unless he
waives the right in favor of his wife
d. An unmarried individual with a child out of the wedlock can claim a personal exemption as a head
of the family plus additional exemption

B 15. Mr. A with 2 dependent minor legitimate children became a widower in January of 2014. In February
of the following year, he got married to Ms. B and subsequently in November of the same year, the
latter gave birth to three (3) ,boys. For calendar year 2014, Mr. A's basic and additional personal
exemption is: •

a. P 75,000.00 c. P125,000.00
b. P 100,000.00 d. P150,000.00

B 16. A German citizen residing in Germany, married, is doing business in the Philippines. His country
allows non-resident Filipino with income from Germany a basic personal exemption of P30,000.00 as
head of the family, P40,000 as married and P15,000 as single. The allowed personal exemption he can
claim is
a. P 50,000.00
b. P40,000.00
C. P 30, 000.00
d. P 15,000.00
C 17. A legally married couple had the following data in year 2014:
a. Two qualified legitimate dependent children
b. Two dependent nephews
C. One illegitimate child of husband
d. One of the legitimate children died in January 2014
e. Both spouses are gainfully employed

The claimable personal and additional exemption of the couple in 2014:

a. H P 50,000, P 125,000
b. H — P 100,000, W — P 50,000
C. H- P 125,000, W P50,000
d. H — P150,000, W P 50,000
18. A, who became a widower in February of taxable year 2014 had the following dependents:
a. Two legitimate children J. O. A.
b. Recognized natural child with current common law wife
C. B, his common law wife
d. Illegitimate child with another woman
Tax 80-02
A The total basic personal and additional exemption in 2014 is:
a. P 150,000 b. P100,000
C. P 125,000 d. P 75,000

C 19. A, single, earned P200,000 (net of P50,000 withholding tax) compensation income from employment
from July to December 2014. He has a legally adopted child as qualified dependent and paid P3,000
as health and hospitalization insurance premiums from July to December. For 2014, he can deduct
premiums for health and hospitalization insurance of:
a. P3,000
b. P2,400
c. P 1,200
d. P

B 20. Using the preceding number, his personal and additional exemption is
a. P 40,000
b. P75,000
c. P57,500
d. P 66,000

D 21. Which of the enumerated taxpayers below can claim personal exemption only if there exists a
reciprocity clause/law between the Philippines and his country?
a. Non-resident citizen
b. Resident alien
c. Non-resident alien not engaged in business in the Philippines
d. Non-resident alien engaged in business in the Philippines

D 22. Which of the following individual taxpayers cannot avail of the allowed deductions for health and
hospitalization insurance premiums?
a. Non-Resident citizen
b. Resident alien
C . Non-resident alien engaged in business in the Philippines
d. Non-resident alien not engagd in businesfs, in the Philippines

D 23. May not claim personal exemption

a. Non-resident citizen who stayed in the Philippines for 182 days
b. Non-resident engaged in trade or business in the Philippines under certain conditions
C. Resident alien
d. Non-resident alien who stayed in the Philippines for 180 days

A 24, Exemption which is determined according to the status of the taxpayer

a. Personal exemption
b. Additional exemption
c. Optional standard deduction
d. Special additional personal exemption

B 25. Exemptions allowed based on presence of qualified dependent children, qualified dependent foster
children, and qualified dependent PWD
a. Personal exemption •

b. Additional exemption
C. Optional standard deduction
d. Special additional personal exemption

D 26. Will not qualify as dependent

a. Legitimate child
b. Brother J. O. A.
C. Mother
d. Nephew

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B 27. The number of dependent children who will qualify for additional exemption purposes shall not
exceed.
a. 3 children
b. 4 children
C . 5 children
d. 6 children

D 28. An unmarried or legally separated man or woman with one or both parents, or with one or more
brothers and sisters, or with one or more legitimate, illegitimate, or legally adopted children living
- with and dependent upon him or her for their chief support, where such brothers or sisters or children
are not more than 21 years of age, unmarried and not gainfully employed or where such brothers, or
sisters, or children, regardless of age are incapable of self-support because of mental or physical
defect is
a. Good father of a family •
b. Married
C. Single
d. Head of the family

D 29. A non-resident alien is deemed doing business in the Philippine if he

a. Is an individual whose residence is within the Philippine
b. Is an individual whose father or mother is an alien who is engaged in business in the Philippine
C. Is an individual who is naturalized in accordance with law
d. Shall come to the Philippine and stay therein for an aggregate period of more than 180 days during
a calendar year

D 30. One is not correct ,

a. If the taxpayer marries during the taxable year, he may claim the personal exemption in full as a
married person for such year
b. If the taxpayer dies during the taxable year, his estate may still claim the personal and additional
exemption for himself and his dependents as if he died at the close of such year.
C. If the spouse of the taxpayer or any of the dependents dies during the taxable year, the taxpayer
may still claim the same exemptions as if death occurred at the close of such year
d. If the taxpayer should have additional dependent children during the taxable year, he can always
claim the additional exemptions for such year

B 31. One is correct

a. Where both husband and wife receive compensation income, the additional exemption • shall be
claimed by the wife unless she explicitly waives her right in favor of her husband in the
withholding exemption certificate
b. Husband and wife shall be treated as separate taxable units and each shall be allowed to claim
personal exemption for married individuals.
C gross income does not exceed P20,000, a special additional personal exemption of P4,000 may
. If
be claimed by the taxpayer.
d. Husband and wife shall be treated as separate taxable units and shall be allowed to claim only one
personal exemption either for the husband or the wife at their option.

A 32. A. The term "chief support" means more than one-half of the requirements for support
B. If two single individuals contribute equal amounts for the support of a dependent, neither one of
them may qualify as head of the family
a. True, true b. True, false , J. O. A.
c. False, true d. False, false

Tax 80-02
A 33. A. If any of the qualified dependents becomes 21 years old during the taxable year, e taxpayer may I
still claim the same exemptions as T such dependent became 21 years old at the c ose of such year
B. Parents living with and dependent upon the taxpayer for their chief support reg (Hess of their age
will qualify as dependents .
a. True, true
b. True, false
c. False, true
d. False, false

B 34. A. If the 'dependent child marries during the taxable year, the taxpayer may still clai the same
exemption as if the marriage occurred at the close of such year.
B. In the 'case of married individuals, the personal and additional exemptions sh be claimed by .
only one of the spouses.
•
a. True, true
• Triux fai et.
WV, WA. •

c. False, true
d. False, false

B 35. The personal exemption of a non-resident alien engaged in trade or business in the Philippine is equal
to that allowed by
a. The income tax law of his country to a citizen on the Philippine not residing there
b. The income tax law of his country to a citizen of the Philippine not residing there or the amount
provided by the NIRC to a citizen or resident whichever is lower 1 .
c. The NIRC to a citizen or residentk)f the' Philippines
d. The income tax law of his country to a citizen of the Philippine not residing there or the amount
provided by the NIRC to a citizen or resident whichever is higher

A 36, A. If a taxpayer marries during the year, he may claim the personal exemption for married
individuals in full for such year
B. A dependent child who marries within the year may still qualify as dependent for the year.
a. True, true b. True, false
c. False, true d. False, false

D 37. With regard to deduction for premiums on hospitalization and health insurance, which of the
following statements is wrong?
a. Allowed as deduction even if income is from compensation only
b. Allowed as deduction even if income is from business or practice of profession
c. Allowed as deduction even if mixed income
d. Allowed as deduction only if the taxpayer is taking itemized deductions from gross income

C 38. In which of the following should the additional exemption not be allovrd to the taxpayer?
a, An alien, whose dependent child is living with him in the Philippines
b. A resident citizen, who has a 25 year old mentally retarded son
C . A resident citizen, who has a 50 year old mother as his dependent
d. A resident alien with an illegitimate child, 7 years old

D 39. Which of the following dependents is not qualified to entitle a taxpayer additional personal
exemption?
a. Recognized natural son who celebrated his 21 st birthday during the taxable year.
b. Legitimate son, 21 years old who got married on December 31, of the year
C. Legally adopted son, 21 years old son who became employed December 30, of the taxable J.
year.O. A.
d. Widowed mother, who celebrated her 59 th birthday during the taxable year

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B 40. For income tax purposes, which of the following is considered head of the family?
a. Married individual who has dependent minor child.
b. Married but legally separated individual with a dependent mother who is 59 years old
C. Single individual with a common law wife
d. Married individual even if he has no children

C 41. Which of the following dependents will qualify a single taxpayer as head of the family?
a. Taxpayer's brother, 22 years old, =employed, unmarried, living with him and dependent upon
him for support.
b. Taxpayer's 'sister, 18 years of age, unemployed, unmarried, living with their parents, but
dependent upon him for chief support.
C. Taxpayer's illegitimate son, 12 years old, unemployed, single, living with him and dependent
upon him for support
d. Taxpayer's godchild, 10 years old and dependent upon him for chief support.

D 42. Which of the following statements is wrong? The premiums on hospitalization and health insurance
may be deducted
a. Not to exceed P2,400 a year per family
b. Not to exceed P200 per month
C. If the family income does not exceed P250,000
d. By either spouse in the case of married individuals

43 46 A, married, had the following data for the taxable year:

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Gross income Philippines P400,000 •

Gross income, USA 300,000

Expenses, Philippines 200,000
Expenses, USA 150,000

D 43. If the taxpayer is a resident citizen, married his taxable income is

a. P309,000
b. P318,000
c. P350,000
d. P300,000

C 44. If the taxpayer is a non-resident citizen, married, his taxable income is

a. P300,000
b. P159,000
C. P150,000
d. P200,000

C 45. If the taxpayer is resident alien, married, his taxable income is

a. P300,000
b. P159,000
C. P150,000
d. P200,000

B 46. If the taxpayer is a non - resident alien engaged in business in the Philippines married and his country
allows reciprocity of P30,000, as personal exemption for married individuals, his taxable income is
a. P370,000
b. P170,000
C. P200,000 J. O. A.
d. P150,000

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,

not
D
,

47. If the taxpayer is a non-resident aliet . engaged in business in the Philippines marri d and his countryl
grants P35,000 as personal exemption ^for married individuals, his taxable income. is .
I
a. P370,000
, i .
b. P170,000 1 ,.
c.. P200,000
. d. P400,000 ,
. .
, ..
48. Taxpayer, married his girlfriend on December 30, 20,13. The following occurred aftelward . s:
a. His wife gave birth to a baby girl ,;1 )n Decembpr 31, 2013 •
b. His wife gave birth to twins, both "boys on November 1, 2014 , .,.
_ .,
C . His wife gave birth to triplets on October 1, 2015 . ..,,
.
d. His wife had a miscarriage on December 31, 2015 resulting to her cl.ath. .I
Required. Determine the personal and additional exemption of the taxpayer- in 2013, 2014 and 2015
2013: 75,000 2014: 125,000 2015: 150,000
,
49. A resident citizen, single with 4 qualified dependent illegitimate children had the following during tii 1
calendar year:
Gross compensation income ' P250,000 .
Expenses related to his employment 120 000
, -
SSS Premium contributions • 3,600
Philhealth contribution 2 400.
,

Pag-ibig contributions 2 000

, ' ' '! •)
Union dues . , , 1 000:
Premiums on health insurance , 4,000 .,
,, . • .
C . The taxable income for the year before personal and additional exemption is ..
.,
a. P237;000
' b. P241,000
- c. P238,600 . ,
. i
d. P117,000 . I

B 50. The Tax Reform Act of 1997 is

a. RA 9337
b. RA 8424
e. RA 9504
d. CA 466

C 51. Using the preceding number, it took effect on

a. January I., 1997 •

b. December 11, 1997

C. January 1, 1998
d. July 6, 2008

C 52. The Tax Reform Act of 1997 was partly amended by (latest)
a. RA. 9337
b. RA 8424
C. RA 9504
d. RA 7506 J. O. A.

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D 53. In 2015, Nelia Gomez, a MWE, received from her employer an annual minimum wage salary of
P99,702. Aside from this, she also received P8,000 for holiday pay, overtime pay, and night shift
differential pay. Furthermore, she received P8,303 as her 13 th month pay. What amounts shall she be
taxable on?

a. P8,000.
b. P107,702.
C. P8,303.
d. None.

C 54. Nelia in number 53 above was promoted in June 2016, and starting the same month was given a raise
in salary which is more than the statutory minimum wage. Will her entire compensation during 2016
be taxable and subject to withholding tax?

a. Yes. Her entire earnings shall be taxable.

b. No. Her entire earnings shall not be taxable.
C. Only her earnings from June 2016 to December 2016 shall be taxable and subject to withholding
tax.
d. None of the above.

B 55. Mr. Gigolo (resident citizen) appoints the Trust Department of Tyra Bank to manage his money
pursuant to a trust agreement. The Trust Department proceeds to invest the money in a 5-year
corporate bond.

If Mr. Gigolo withdraws his money from the trust account after 8 years, the interest income from the
corporate bond is:

a) Exempt from income tax

b) Subject to the 20% final tax
c) All of the above
d) None of the above

B 56. If instead, the bank in number 55 above, in the name of Mr. Gigolo, invests the money in a 20-year
long-term investment certificate issued by Bank of Ruptcy, will the interest income therefrom be
exempt from income tax?

a) Yes, regardless of the holding periods of Mr. Gigolo and the trust.
b) Yes, provided the holding period of Mr. Gigolo and the holding period of the trust in the LT
investment certificate are both at least 5 years.
c) All of the above.
d) None of the above.

D 57. Kaino sold his residential house and lot located in Manila on January 5, 2015 for P8,000,000. The
property was purchased in 2005 for 1)3,000,000. The current market value of the property at the time
of sale was:

BIR Commissioner's zonal valuation P 9,000,000

City Assessor's schedule of values - 6,000,000

What is the capital gains tax on the sale?

a) P300,000
b) P360,000 J. O. A.
c) P480,000
d) P540,000
Tax 80-02
D 58. If Kaino in number 57 above, within 6 months after the sale, purchases another residence for
P8,000,000, what will be • the capital gains tax on the sale and what would be the cost (basis) of the
new residence for income tax purposes?

a) P540,000; P8,000,000
b) PO; P6,000,000
c) P540,000; P9,000,000
d) PO; P3,000,000

D 59. Suppose Kaino in number 57, within the I 8-month reglementary period, instead purchases a new
principal residence at a cost of P10,000,000. What will be the capital gains tax on the sale and what
would be the cost (adjusted basis) of the new residence for income tax purposes?

a) PO; P3,000,000
b) PO; P10,000,000
c) PO, P9,000,000
d) PO; P5,000,000

A 60. Suppose Kaino in number 57, within the 1.8-month reglementary period instead purchases a new •
residence at a cost of P5,000,000. What will be the capital gains tax on the sale?

a) P202,500
b) P300,000
c) P480,000
d) P337,500

B 61. In number 60, what would be the cost (adjusted basis) of the new residence for income tax purposes?

a) P3,000,000
• b) P1,875,000
c) PO
d) P5,000,000

D 62. The following are taxed at a final rate of 20% except:

a) Cash or property dividend payment by a domestic corporation to a NRAETB.

b) Share of a NRAETB in the distributable after tax net income of a business partnership where he is
-

a partner, or share in the after-tax net income of an association or joint venture taxable as a
corporation of which he is a member.
c) Royalty payments (except royalties on books, literary works and musical compositions) to
citizens, RAs, and NRAETB, and prizes exceeding P10,000 paid to the same persons
d) Interest and other payments upon tax-free covenant bonds, mortgages, deeds of trust, or other
obligations under Section 57(C) of the Tax Code

Tax Rate
On citizens, resident aliens, non-resident aliens engaged in business in the Philippines
On Compensation, business and other Income

aL
fes. •1314t not over of Excess Over
P10,000 5% -
P 10,000 30,000 P 500 + 10% P 10,000
30,000 70,000 2,500 + 15% 30,000
70,000 140,000 8,500 -+ 20% 70,000 •

140,000 250,000 22,500 + 25% 140,000

250,000 500,000 50000 + 30% 250,000
J. O. A.
500,000 - 125,000 + 34% 500,000
The top marginal rate to be reduced to 33% effective Jan. 1999, 32% effective Jan. 2000
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Tax 80-02